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Ofgem has said that energy firms should start compensating customers whose homes were wrongfully fitted with a PrePayment Meter (PPM), without waiting for the results of a major review
The energy regulator has announced the launch of urgent work with stakeholders to look at what further protections may be needed within the rules, regulations and guidance around PPMs and seek views on other measures that could reduce the need for PPMs to be installed or switched to remotely, to conclude by the end of March 2023
Ofgem issued a Provisional Order to British Gas at the start of this month temporarily banning them from doing any forced installation or remote mode switch. This followed undercover reporting from The Times which alleged appalling behaviours from the company in the treatment of customers when forced PPMs were being installed, and enough doubt was raised of potential rule breaches. Ofgem also made an agreement with all other suppliers to voluntarily suspend forced installations of prepayment meters and remote switching of smart meters to prepayment mode until 31 March 2023.
The regulator has also set out the scope of a new in-depth Market Compliance Review (MCR), announced in January, focused on forced installation and remote mode switch. Alongside this, Ofgem is also bringing together suppliers, consumer groups and charities to look at what further protections could be introduced within the rules, regulations and guidance around PPMs and seek views on other measures that could reduce the need for PPMs to be installed
The PPM market-wide review will also conduct targeted engagement – facilitated through consumer groups, the Energy Ombudsman and customer feedback. Ofgem will be seeking views from all interested parties on the licence conditions and guidance that covers the use of PPMs, including identification of vulnerabilities by suppliers, safe and reasonably practicable rules and processes in place for installing or switching customers to PPM, as well as asking for views on other measures that could reduce the need for PPM to be installed in the first place.
Ofgem says it wants to see a market where no customers are forced onto PPMs if it is not safe for them and where suppliers consistently protect their vulnerable customers. This includes suppliers reliably identifying any relevant vulnerabilities and having processes and practices for installation of (or switch to) PPMs that are fair, clear and effective. Ofgem’s intent is that the regulatory rules and guidance should provide a robust foundation for these outcomes.
Jonathan Brearley, CEO of Ofgem, said “As a result of the unprecedented surge in energy prices, households across the country are facing significant energy bills and this has meant many are finding themselves in debt and being forced onto prepayment meters (PPMs). I am concerned about the way customers in already distressing situations are being treated when suppliers force them onto PPMs. That’s why, today, we have set out further details on the two investigations, one into British Gas for potential breaches that have been alleged indicating that something went very badly wrong at British Gas and the other into PPMs across all suppliers to assess whether this is an isolated case.”
“The rules and regulations are clear that installing forced PPMs should only be done as a last resort and only where it is safe and practicable to do so. We expect suppliers to treat customers with compassion and professionalism and those executing a warrant should take into account what they find when they visit a home and pause the installation if they see a safety risk. Where this hasn’t happened, we will hold suppliers to account.”
“However, I’m telling suppliers not to wait for the outcome of our reviews and to act now to check that PPMs have been installed appropriately, and if rules have been broken, offer customers a reversal of installations and compensation payments where appropriate. There will also be fines issued from Ofgem if the issue is found to be systemic.”
“We are taking this issue extremely seriously and customers should feel reassured that where the rules have been broken, Ofgem will act.”
Gillian Cooper, Head of Energy Policy at Citizens Advice, said “We’ve seen far too many cases of people, who are struggling to pay their bills, being forced onto a prepayment meter despite clear evidence this isn’t safe for them.”
“We’re particularly worried about disabled people and those with long-term health conditions. Our research shows nearly one in five households including someone in these groups, who ran out of credit last year, went on to spend at least two days without an energy supply.”
“Ofgem is right to repeat our call for suppliers to check if customers need to be moved off a prepayment meter. If suppliers don’t heed this call, the regulator must be ready to step in. If progress isn’t made, the government must take action.”
